Facebook Inc. on Friday abruptly abandoned a plan to change its stock structure that would have given Chief Executive Mark Zuckerberg more control, the Wall Street Journal reports.
The U-turn heads off a public trial scheduled to start next week for a lawsuit filed against Facebook by shareholders who claimed that conflicts of interest and other behind-the-scenes discussions tainted a board decision to approve the creation of a new class of shares, the paper said.
The share restructuring was aimed at ensuring Zuckerberg’s continued control of Facebook even as he planned to give away 99 percent of his family’s wealth over his lifetime.
Zuckerberg had been scheduled to take the stand in that trial at Delaware’s Chancery Court on Tuesday, in a hearing that was due to be open to the public.
A lawyer for the plaintiffs, Stuart Grant, said he expects the case to now be dismissed. Facebook’s decision is “all the relief we asked for”, the lawyer was quoted as saying. “It’s a complete win.”
Zuckerberg said he doesn’t need the change in shareholding structure because Facebook’s stock has risen so much that he can fund his for-profit philanthropic organization, the Chan Zuckerberg Initiative, for at least 20 years by selling his existing stock without losing control.
Facebook shares have risen more than 50 percent since April 2016, when the plan was first announced.
Zuckerberg acknowledged that his plan to change from a two-class to a three-class share structure “was going to be complicated and it wasn’t a perfect solution. Today I think we have a better one.”
In a blog post, Zuckerberg, whose fortune is estimated at US$71 billion, said he plans to accelerate the sale of shares to fund the Chan Zuckerberg Initiative.
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